Southern Cross Electrical Engineering Limited

[2014] FWC 7356

[2014] FWC 7356

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185—Enterprise agreement

Southern Cross Electrical Engineering Limited
(AG2014/5864)

DEPUTY PRESIDENT MCCARTHY PERTH, 16 OCTOBER 2014

Application for approval of the Southern Cross Electrical Engineering Limited Electrical Enterprise Agreement 2014.

[1] Southern Cross Electrical Engineering Limited (the Applicant) lodged an application for approval of the Southern Cross Electrical Engineering Limited Electrical Enterprise Agreement 2014 (the 2014 Agreement) on 30 April 2014. The Employers Statutory Declaration states that there are 18 persons who will be covered by the Agreement. It seems that this Agreement replaces the Southern Cross Electrical Engineering Limited Employee Collective Agreement 2009 (the 2009 Agreement)for those employees that will be covered by the 2014 Agreement.

[2] On 9 May 2014, I listed the application for a conference to be held on 23 May 2014. The “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (the AMWU) the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (the CEPU) and the Construction, Forestry, Mining and Energy Union (the CFMEU) (collectively the Unions) notified my Chambers on 20, 21 and 22 May 2014 that they wished to be heard in respect of the Application. The Unions indicated during the conference that they objected to the 2014 Agreement being approved. I subsequently issued Directions requiring outlines of submissions and objections and responses by both the Applicant and the Unions.

[3] The Unions argue that employees covered by the 2014 Agreement were not fairly chosen due to the exclusions of various employees from the coverage of the 2014 Agreement and these exclusions thus prevent the 2014 Agreement being approved.

[4] Clause 2 of the 2014 Agreement provides that: “This Agreement covers and applies to Southern Cross Electrical Engineering Limited [ABN number given] and the Employees”. Schedule 1 Definitions defines Employee in the following way:

“Employee means an employee of the Company engaged to perform electrical work for the Company in the classifications referred to in clause 6.1, with the exception of casual employees, employees working in Queensland and any employee engaged to work on the following contracts:

• Southtown Newman - Purchase Order Number 5205546308;



• Yarnima Newman - Contract Number 5242-C53121-SP1;



• Yandi - Contract Number YSP/E/CC/1005;



• Cape Lambert Rail Capacity Project - Contract Number - RCE353 - SPE - E002;



• Cape Lambert Services Operations/Maintenance - Contract Number CW1992257;



• East Intercourse Island - Contract Number PE500742/E/CC/1001; and



• Cape Lambert Project Car Dumpers and Screenhouse - Contract Number CLB/E/CC/1169.

[5] The classifications referred to in Clause 6.1 are as follows :

• Electrician Special Class
• Instrument Fitter Grade 2
• Instrument Fitter Grade 1
• Electrical Tradesperson
• Electrical Assistant
• Cable Jointer
• Qualified Tradesperson
• Crane Driver/Rigger/Scaffolder (Certified) (Advanced) 12 months exp
• Rigger/Scaffolder - Other (basic) or Dogperson
• Storeperson/Peggy

[6] The Unions argued that the employees who will be covered by the 2014 Agreement were not fairly chosen because several groups of employees are excluded from coverage. The exclusions are (i) all employees in Queensland (ii) all casuals and (iii) all employees engaged under specific contracts the Applicant has with other entities.

The exclusion of Queensland

[7] The Applicant explained that the SCEE & CEPU Electrical Division Queensland Enterprise Agreement 2013-2015 (Queensland Agreement) covers and applies to all employees of the Applicant employed in Queensland. The Queensland Agreement was approved by the Fair Work Commission (the FWC) on 25 July 2013. The Queensland Agreement has a nominal expiry date of 31 December 2015.

[8] The employees of the Applicant in Queensland therefore are and will remain covered by the Queensland Agreement and that agreement which will continue to apply to those employees.

[9] The Unions had asserted that the Applicant had provided no explanation of the exclusion of Queensland employees and assumed that the employees would become agreement free. That is not the case and the explanation from the Applicant seems to me to be sound and practical.

[10] When the Queensland Agreement was made and approved the Queensland employees were likely to have been considered to be distinct and thus fairly chosen. It logically follows that non-Queensland employees are also distinct. I find that employees other than those covered by the Queensland Agreement are geographically, organisationally and operationally distinct from the Queensland employees.

Exclusion of employees under specific contracts

The Applicant’s arguments

[11] The Applicant submitted amongst other things that:

• The employees covered by the 2014 Agreement were the only employees employed by the Applicant who were not otherwise covered by an agreement and were not mobilised to perform work for the Applicant’s clients under contracts.

• The excluded employees of the Applicant are engaged to perform work on a single contract for project work and their employment comes to an end when work under the contract finishes. All employees sign and accept new employment contracts when commencing on any new project work for the Applicant. The excluded employees are not engaged to move between works on different contracts.

• The excluded contract employees were either:

• working on specific contracts that were due to finish before the anticipated commencement of the 2014 Agreement and the nominal expiry of the 2009 Agreement; or



• Working on specific contracts that were drawing to close but were covered by other enterprise agreements.



• For example, the following excluded contracts identified had already come to an end while negotiations for the 2014 Agreement had been occurring.



• Southtown Newman.



• Yandi.



• Cape Lambert Rail Capacity Project.



• East Intercourse Island; and



• The completion date for the Yarnima contract was the end of June 2014.

[12] The Applicant argues that they approached the coverage of the 2014 Agreement in the manner they did because of a clear organisational distinction between those employees covered and those not covered. The Applicant says that there are good operational reasons why the 2014 Agreement does not cover employees engaged to work on the various contracts specified in the Agreement (the contract specific employees). They argue that the contract specific employees are engaged to perform project work on a single contract and their employment comes to an end when work on that contract finishes. The Applicant also stated that the contract specific employees were not engaged on the basis that they would move between works on different contracts.

[13] The Applicant submits that an employer’s organisational structure for its workforce is a dynamic concept which must adapt to prevailing market conditions and commercial considerations. The Applicant argues that there is an organisational distinction between the employees and that arises because:

“(a) employees who are currently mobilised to perform services under a specified contract as stated in the Employee Definition on behalf of the Applicant’s clients; and

(b) those employees who are not mobilised to perform such work and are not otherwise covered by an enterprise agreement.”

[14] The Applicant adds that the exclusion of the Applicant’s contracts at the Cape Lambert Project does not undermine the interests of those excluded employees because:

“(a) the Cape Lambert Agreement, which is not due to nominally expire until 2 December 2014, applies to and covers the excluded employees working at the Cape Lambert Project;

(b) the Applicant’s work at the Cape Lambert Project will be completed before the nominal expiry date of the Cape Lambert Agreement; and

(c) this Agreement will not apply to any future packages of work awarded to the Applicant at the Cape Lambert Project, because the project is coming to an end for the Applicant at the end of 2014. This means this Agreement will not apply to any work that is within the scope of the Cape Lambert Agreement.”

The Unions’ argument

[15] The Unions raised a number of objections regarding the exclusion of employees not engaged to perform works covered by a commercial contract for the Applicant. They argued that this did not constitute a geographically, organisationally or operationally distinction.

[16] The Unions argued that the employees of the Applicant move from site to site depending on the availability of work and the success the Applicant has in winning contracts for works. The Unions argue that whilst different contracts may be a commercial distinction for the Applicant they are not, or should not be, relevant for the purposes of coverage by an agreement of this nature.

[17] The Unions also assert that many long term employees of the Applicant work on different sites and different work contracts as required and they move between work on different contracts.

[18] The Unions concerns includes a view that when the various contracts are completed those employees who were performing work on those contracts will come under the coverage of this Agreement. They suggest this is a discriminatory exclusion, which undermines the industrial position of those employees now and in the future.

Consideration on this point

[19] The difference that arises between the Applicant and the Unions appears to be the contention by the Unions that employees of the Applicant move from site to site, or project to project, whereas the Applicant says that is not the way they operate and do not intend to operate in that way.

[20] However, even if the Unions are right and employees of the Applicant are medium or long term employees that go from contract to contract, it does not follow that the employees are not engaged for specific contracts and finish their employment at the end of the contract they were engaged for. It would be unlikely that any contractor in the construction industry has an even flow and level of work that allows employees to transition smoothly from one job to another and employee numbers remain about the same. Thus it is not surprising that an employer will wish to organise their employment arrangements to be compatible with their organisational arrangements.

[21] It is to be expected that each contract awarded to the Applicant here is a discrete operational undertaking. Whilst the type of work on one contract might be similar to the type of work on another contract each contract by the very nature of contracts will be operationally distinct. The operations for each contract will vary as will the number of employees and the specific employees engaged. Indeed the contracts won by the Applicant might have very different structural aspects, risk sharing arrangements and financial arrangements. These things ebb and flow depending on a wide range of factors, not the least of which is the demand for and supply of work.

[22] I also observe that at least one of the Unions involved in the proceedings here has been party to a number of agreements that has the scope of the agreement defined by the type of contract a contractor might have and even with whom it might have the contract. Sometimes agreements have distinct coverage by the dollar value of a contract.

[23] I find that the exclusion of employees by virtue of those employees performing works under nominated commercial contracts does not mean the employees who were involved in and made the agreement were not fairly chosen. I therefore find that the employees were fairly chosen based on the contracted works exclusion.

Exclusion of casuals

The Applicant’s Arguments

[24] The Applicant submitted that:

• At the time of issuing the Notice of Representational Rights the Applicant employed no casual employees.

• At the time of voting and subsequently making the 2014 Agreement, there were no casuals engaged by the Applicant.

• The Applicant has no intention to engage casual employees in the future nor has it engaged casuals as part of the composition of regular and systemically mobilised workforce.

• Casual employees are organisationally distinct because they are engaged on a different basis to permanent employees, that is casual employment is characterised by the informality, uncertainty or irregularity of the engagement.

• Employees engaged on a casual basis are organisationally distinct in that they represent a different organisational division of employees who are engaged on a different basis. They are operationally distinct because they are engaged on a casual basis according to need. If they are engaged on a regular and systematic basis with reasonable expectations of ongoing work, they are no longer capable of being classified as casuals.

• Casual employees can also be operationally distinct because they are engaged on a casual basis according to the needs and operational requirements of the business. Due to the nature of project work, employees of the Applicant performing project work are not capable of being classified as casuals because this type of work requires employees to be engaged on a regular and systematic basis with reasonable expectation of ongoing work for the life of the project or the contract.

[25] The Applicant says that the exclusion of casual employees in the Employee Definition and Application Clauses is not based on an operational or organisational distinction and was justified on organisational and operational lines simply for the fact that the Applicant does not usually engage casuals, nor were any engaged at the time of making the 2014 Agreement.

The Unions’ Argument

[26] The Unions submitted that:

• Casuals will be employed, presumably on the same projects and doing the same work as their non-casual workmates, the only distinction will be that they are not covered by the proposed agreement.

• A mode of employment, whether it is part time, casual or permanent full time does not of itself indicate any operational or organisational distinction.

[27] The Unions also expressed their suspicions that:

“49. If casual employees are to be employed in the future, as is suggested in paragraph 37 of the Applicant’s submissions, they will be employed on lesser conditions which has the effect of undermining the conditions of those who are covered by the agreement.

50. It is possible that permanent employees may be replaced by casual employees in the future, thus diluting the effect of the Agreement for those employed under it. This is the ultimate unfairness for the group to be covered by the Agreement.”

[28] I consider there are good reasons explained by the Applicant as to why casuals were not included in the 2014 Agreement. Whilst I do not consider there are organisational distinctions there does appear to me to be operational distinctions between casuals and non-casuals. I therefore find that the employees were fairly chosen for the purposes of the casual worker exclusion issue.

Conclusions

[29] For the reasons stated above I consider with respect to whether the employees who will be covered by the 2014 Agreement were fairly chosen that:

• there are geographic distinctions with respect to employees not employed in Queensland;

• there are operational distinctions with respect to employees who are not engaged in the specific contract works identified;

• there are organisational distinctions with respect to employees who are not engaged on contract works;

• there are operational distinctions with respect to employees who are casuals.

[30] I therefore find that the employees who will be covered by the 2014 Agreement were fairly chosen.

[31] The Unions should lodge a ‘Form F18 - Statutory declaration of employee organisation in relation to an application for approval of an enterprise agreement’ by 5:00pm Monday, 20 October 2014 if they wish for the 2014 Agreement to cover them.

DEPUTY PRESIDENT

Final written submissions:

Applicant, 24 June 2014.

“Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia and Construction, Forestry, Mining and Energy Union, 17 June 2014.

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